What Does It Mean When Someone Is a ‘Cash Buyer’ of a Property?

What is meant by a 'cash buyer' and what are the pros and cons when dealing with one?

When discussing large payments, you might have come across the term ‘cash buyer’ before. Whilst it might seem self-explanatory at first, the term can be a lot more loaded when it comes to buying property. In this blog, we’ll look at how being a cash buyer of a property works, and what the pros and cons are. 

What is a ‘cash buyer’ of a property?

A cash buyer is someone who wants to buy a property outright with money they already have at their disposal. This means that they won’t need a mortgage or any type of loan to be able to buy the property they are interested in. However, cash buyers must have all the money available when making an offer for them to be considered seriously, and this can sometimes pose issues. To be fully classed as a cash buyer, you must have the money available to buy a property without needing to sell your old one to secure the funds.  

The process for a cash buyer, is it the same?

Property cash buyers

The buying process is similar; however, a cash buyer will not have to go through the same procedure of securing a mortgage. Despite this, cash buyers will likely want to do their due diligence before agreeing to purchase a property, so they may consider performing similar checks to lenders. Surveys and property searches will still take place, but the process is usually faster without a lender being involved. 

Pros of cash buyers

  • Faster sales – Both buyers and sellers are usually happier with a faster transaction, and it’s usually the case that cash buyers can complete the purchase more quickly. Removing the mortgage lender and other third parties from the equation usually means that the transaction takes considerably less time, which is ideal for sellers who are looking for a quick move. 
  • More certainty – Cash buyers usually have previous experience in the property market, and when they make an offer, they are often certain regarding the purchase. As you might know, there is often a lot of uncertainty involved in property transactions, however, cash buyers can be regarded as a safer bet due to having the funding available upfront. 
  • No involvement of the property chain – Cash buyers are often the key to avoiding the dreaded property chain, where you are waiting for buyers to sell their own properties before the transaction is complete. With cash buyers, this is not a concern, and the lack of chain means the purchase is less likely to fall through. 
  • Fewer obstacles – As there is no need for the property chain and no need for mortgage lenders, there are fewer obstacles in place which could potentially uphold the deal from being completed. Cash buyers are also usually ready to purchase any kind of property, so depending on the terms of the deal on the table, cash buyers are usually ready to complete providing they are happy with what’s on offer. 

Cons of cash buyers

  • Lower prices – Due to the fact cash buyers are offering the capital upfront, the offers they make can be lower than the market value of the property in question. Whilst some sellers may not mind selling at a lower price if they can secure the money upfront, it can open the door to being low-balled and not receiving a fair price for the property. 
  • Beware of scams – Although rare, scams can take place when dealing with cash buyers. It’s always advised to use a reputable estate agent when selling your property, as listing it yourself poses more risks and can make yourself more subject to scammers. 
  • Issues with the property – Some sellers ask for ‘cash buyers only’, and sometimes this is down to them wanting to quickly get rid of a property due to a fault or severe issue. If a seller suspects the property is ‘unmortgagable’, they may try and sell to cash buyers to avoid having to get a surveyor involved. This is why it’s important for cash buyers to do their due diligence and to thoroughly ensure there are no major issues with the property they are looking to purchase. 

As with anything, there are benefits and disadvantages for both buyers and sellers involved in a cash-only deal in the property market. It will likely come down to what suits you best and whether the deal on the table is appealing to both parties. 

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